1. The graph below shows natural log of real GDP per capita for South Africa between 1985 - 2015. Which of the following statements are correct? 11 10.9 10.8 y = 0.0097x + 10.601 Natural log of Real GDP per capita 10.7 10.6 10.5 10.4 1985 1987 1989 199 1993 1995 1997 1999 200 2003 2005 013 20 200 201 2015 A. In the figure the slope of the regression line is 0.0097 If this value were 0,012 the line would be flatter. B. GDP growth in 2004 was above the long-run average C. For the period 1991 to 2005 annual GDP growth was below the long-run average D. GDP growth between 2006 to 2015 was above the long-run average 2. A country's unemployment rate is more sensitive to changes in GDP growth when the correlation graph between these two variables is: A. Positive and steep B. Negative and steep C. Positive and flat D. Negative and flat Household's endowment following the temporary income shock: its pattern of consumption if it cannot borrow Income, consumption later ($) Household's initial endowment and pattern of consumption Household's pattern of consumption following the temporary income shock if it can borrow Slope - -(1 + r) Income, consumption now ($)3. The gure above shows the consumption choice of a consumer over two periods. His initial 4. endowment is (y, y}, that is, an income y in both periods, which is depicted by point A. If possible, the consumer prefers to consume the same amount in both periods. The interest rate is r. Now assume that there has been a temporary shock such that the income in period 1 is reduced to y', while the period 2 income is expected to return to y. Assume that a credit- constrained consumer is not able to borrow at all. Based on this information, which of the following statements is correct? A. If the consumer is not credit-constrained, then he will consume c' in both periods such that c' = y - (c' y'](1 + r) (income minus repayment in period 2). B. In the consumer is not credit constrained, then he will be able to borrow to consume the same amount as he would have done on both periods without the temporary shock. C. If the consumer is credit-constrained, then he will consume less in period 2 than he would have done without the temporary shock. D. If the consumer is not credit-constrained, then he will borrow y c' in period 1 in order to smooth out his consumption in the two periods. The total of the components of GDP in the economy is equal to the in the economy. Choose the correct answer. A. Real interest rate B Aggregate demand C. Aggregate output D Ination Which of the following statements is correct about ination? Choose the correct answer. A. It measures the general level of prices that consumers have to pay for goods and services, including consumption taxes. B. The level on inflation can be measured as the ratio between nominal and real GDP. C. When a country is experiencing high levels of ination it means that the citizens are getting more value out of the money they have on hand. D. Ination tends to be higher during periods of high unemployment 6. Tsepo and Thabo are both in the business of selling ice-cream on the beach front. During lockdown they both faced low levels of demand, which resulted in them closing up shop and as a result they both experienced low capacity utilization. The economy has now opened and they are reconsidering whether to reinvest in their businesses. The different investment choices and their payoffs are reected in the payoff matric below. B's prot .5 E . O I: M a a 'u ( If Tsepo and Thabo are in a vicious cycle the outcomes of the game will be: A. Tsepo invests, Tha bo does not invest B. Tsepo invests, Thabo invest C. Tsepo does not invest, Thabo does not invest D. Tsepo does not invest, Thabo invest 7. Tsepo and Thabo are both in the business of selling ice-cream on the beach front. During lock- down they both faced low levels of demand, which resulted in them closing up shop and as a result they both experienced low capacity utilization. The economy has now opened and they resumed business, lucky for them, in the middle of summer as a result they are facing high